Hospitals in Ohio are complaining that proposed cuts in reimbursement by the Bureau of Workers Compensation are unfair, even though the proposed reimbursement level is Medicare +15%. According to one spokeswoman for the hospitals, “There is a misconception that a broken arm costs the same in Columbus, Ohio, as it does in Los Angeles, Calif.,” said Tiffany Himmelreich, spokeswoman for the Ohio Hospital Association, which has 170 member institutions.
Well, talk about a non sequitur. No one is claiming that hospitals in LA have the same costs as hospitals in Columbus. What Ms. Himmelreich is missing is that the proposal would pay the hospital their costs plus a 15% margin. And, with Medicare hospital reimbursement generally accepted as satisfactory, I have a tough time following the Hospital Association’s argument that the cuts are unfair.
Here’s why. Ms. Himmelreich went on to say “”For instance, a hospital with a high level of uninsured patients might charge more than a hospital with a lower level of uninsured.” Since when is it the responsibility of BWC, or Ohio employers, to cover the costs of the uninsured?
I’m as vocal as anyone about the problems of the uninsured, the drag they place on our economy, and the desperate need for our elected officials to get out of their golf carts and fix the problem.
But shifting costs to workers comp payers is not the solution. It hides the problem, and in the long term the Hospital Association’s complaints will do them more harm then good.
Workers compensation premiums are a significant cost of doing business. The BWC is well within its rights to refuse to subsidize a problem that is societal. In fact, between 1997 and 2004, Ohio’s employers overpaid hospitals over half a billion dollars. Think about what that money could have done if it was invested in employee training, new technology, alternative energy sources…
BWC and the Ohio Hospital Association should be working together on the uninsured issue, not fighting.
What does this mean for you?
A reminder to look deeper into issues, because there is a lot of common ground among payers and providers.

My post last week on Medical Malpractice generated a good bit of virtual commentary, some calling me to task for supporting one point of view and others saying I missed the central issues. Thanks to all for their considered and thoughtful comments. I’ll address them and do my best to be brief and factual.

Continue reading Readers’ views on med mal and my biases

The malpractice insurance crisis does not exist. Actually, it does, but only in the popular press and in the minds of the AMA, a few politicians and alarmists. In the real world, the cost of malpractice insurance as a percentage of total practice expenses changed little over the last 30 years, rising from 6% of expenses in 1970 to 7% in 2000.
The finding comes from a report based on data collected by the American Medical Association and published in the MarketWatch section of Health Affairs’ May/June 2006 issue.
While the overall percentage increased by just one point over that period, there were significant changes during the thirty years. From 1970 to 1986 malpractice expenses jumped from 6% to 11% of total practice expense before falling back to 6% in 1996. Premiums bumped back up by a point to 7% in 2000.
Notably, the cost of other practice expenses, including non-physician labor, utilities, rent and medical equipment and supplies, increased much more rapidly than med mal premiums.
Let’s contrast this reality with the hyperbole and outright misinformation generated by some; Ohio Rep. Deborah Price is a great example. She is one of the supporters of med mal reform who have cited some highly doubtful statistics, including one noting that “Four out of 10 Ohio physicians have retired or plan to retire in the next three years due to rising liability insurance premiums”.
If physicians are retiring because med mal premiums are now consuming a couple points more of their practice’s overall expenses, they are lousy business people and probably should join a large group practiice anyway.
NOTE – the AMA has published a comment on their website in an attempt to refute the original article claiming that the analysis stops in 2000 which makes it inaccurate (a possibly valid argument, although one that is refuted prospectively by the authors in their article) and arguing that the data used by the authors is misleading (although the authors make a solid case for their selection of data sources).
My take – the med mal “crisis” can affect pockets of physicians significantly while having relatively minimal effects on the overall population; and the inefficiencies in the insurance market are much greater contributors to the problem than are tort costs. And, most potential suits are never filed anyway.
What does this mean for you?
More wasted time arguing about non-factors when we could be trying to actually solve the real problems driving health care costs up and access down.

The deeper you dig into health care data, the more interesting the stuff you learn. For years, insurers and health plans have been analyzing patient, physician, procedure, and facility data in an effort to learn more about the inter-relationships of costs, outcomes, demographics, and scores of other factors. A lot of this is arcane, a good bit useful, and some downright intriguing.
Into the latter category comes a study that shows surgeons performing the same procedures at the same hospital on similar patients with similar outcomes can incur very different costs.
The study, authored by Washington University in St Louis, indicates that costs can vary by as much as 45%.
What does this mean for you?
When assessing provider performance, you have to consider all aspects, including the total costs for their patients, and not just the physician components,